GRAND RAPIDS — Public-private partnerships may be messy and complex, but they provide the best opportunities to push forward on transformational development projects.
That was the message from experts speaking at the Urban Land Institute forum in Grand Rapids on May 29.
Changes to Michigan's demographics and the state's business climate over the last decade could lead to more opportunities for public-private partnerships, Dan Gilmartin, executive director and CEO of the Michigan Municipal League, told the crowd of developers, commercial real estate professionals and city planners.
Gilmartin called on the state and local governments to help lead the charge in making Michigan's core cities more accessible to private-sector investments.
When asked if it should be government leading the way or the private sector that makes the first commitment, Gilmartin quipped the answer was, "yes."
"The concept of government leading the way is something that private investors are looking for," he said. "We've seen it happen both ways, but getting the act together at the state level and making investments that we can control is a place to start."
Gilmartin said the idea of "place" — the way a city or district comprises itself and its mix of core industries — is likely the most critical aspect of urban development for the state going forward.
"Largely in Michigan, we have been a single-use type of place with separate districts for industry sectors," he said. "We have to roll up our sleeves and create districts that makes sense."
Instead of pigeonholing similar industries together, he said metropolitan areas should be designed to accommodate the ways different businesses interact in the community.
Most planners focus on innovation districts, which include aspects of research and development; urban living spaces; commercial development; information technology centers; schools and universities; and media hubs and design hubs, he said.
To move Michigan toward more 21st century communities and a better economic standing, the state must overcome a number of challeges, he said.
One such challenge is getting past the notion that manufacturing will always be king in Michigan. The state needs to embrace and move toward a knowledge-based economy, he said.
The state must also reverse the trend of disinvestment in higher education, core cities and infrastructure, and it must become more attractive to millennials and entrepreneurs, he said.
Metropolitan centers including Grand Rapids, Detroit and Flint must build off the strengths of their anchor institutions and incorporate public-private partnerships to be successful, Gilmartin said.
The ULI forum discussed several examples of public-private partnerships, including the former GM stamping plant now known as Site 36.
Representatives from The Right Place Inc., developer Lormax Stern and the city of Wyoming touched on the need for all parties to understand one another's goals before entering into the complex agreements.
Rick Chapla, vice president of business development for The Right Place, which is responsible for marketing Site 36, said the partners knew the infrastructure of the facility would prove valuable. They also agreed the end user of the complex should be a large advanced manufacturer who could utilize the entire space.
So far, Chapla said the site attracted potential purchasers from three industry sectors: automotive manufacturing, food processing and agriculture, and renewable energy. The Right Place hopes to bring a development package to the city by the fourth quarter of this year, he said.
Moreover, the developers could soon have more incentives in their toolbox for Site 36. Chapla said The Right Place should soon receive word whether or not it secured the fifth and final Next Michigan Development Corporation designation, which would allow the group to add Renaissance Zone incentives to the property if necessary.
The forum also heard from the parties involved in the city of Wyoming's 28th Street Corridor Master Plan. Mark Miller of Nederveld, Chris Muller of M-Retail Solutions and Wyoming City Planner Tim Cochran discussed the importance of getting buy-in from key stakeholders and property owners. Miller emphasized that it takes time and flexibility from all involved to accommodate a project the scope of the 28th Street corridor. The plan seeks to dramatically reform the layout and increase the feasibility of commercial and mixed-use developments.
"The biggest thing in this was public outreach. We need to give everyone a broad understanding of what was going on and what the expectations are," Nederveld's Miller said. "The process ends up not (being) linear."
Another project at the center of discussion was the Ferris State University and Kendall College of Art and Design Federal Building project.
According to a presentation by Joe Hooker of The Christman Company and Tom Mathison of TowerPinkster, the project started back in 2002, but didn't move forward until 2010 when the city and local legislators secured enhanced state tax credits and recovery zone facility bonds, which pushed the project over the hump.
Ferris, which couldn't capture all of the available tax credits, relinquished some control in the process and essentially allowed Christman to purchase the building, get the credits and then sell the property back to Ferris once the development was complete.
"This project was a convergence of need," Hooker said. "All parties had to be flexible to manage the complexity of this deal."
Kara Wood, economic development director for the city of Grand Rapids, said the city must build trust with its private partners. The trust element directly plays into whether or not a deal can be successful, she said.
"There has to be a strong understanding at the start of how public-private partnerships work within a community," she said. "Of course public-private partnerships are key to what we do here in Grand Rapids, and we want to continue that."